Élio Pagliarulo, who once owned the now-defunct Pâtisseries Pagel chain of bakeries, has begun testifying about his personal and business relationship with construction magnates Frank and Paolo Catania.

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MONTREAL — The former chair of Montreal’s executive committee was “corrupted” by construction bosses attempting to cheat the city’s system for awarding public contracts, the Charbonneau Commission inquiry heard on Monday, and accepted cash payments and high-end kitchen renovations from at least one entrepreneur in exchange for political favours.

Elio Pagliarulo — the former owner of bakery chain Pâtisserie Pagel — dropped his bombshell allegations against former top bureaucrat Frank Zampino during a morning of testimony that included accounts of being severely beaten in the back of an unmarked van and attending lavish parties where Gloria Gaynor sang her hit “I Will Survive.”

Pagliarulo began his time on the stand by describing his own close business and personal relationship with construction boss Paolo Catania; a relationship he said later soured over outstanding debts related to a loansharking gambit the two were involved in.

Pagliarula told the commission that during the first decade of his close friendship with Paolo Catania and his father, Frank Catania, he never heard Zampino’s name mentioned, nor did Zampino show up at any parties or social events organized by the construction clan prior to 2005.

But a $300-million public contract to re-purpose a large swath of land in Montreal’s east end, known as the Faubourg Contrecoeur project, changed all that. According to Pagliarulo, Catania worked out a deal with Zampino that allowed the construction magnate to purchase the land, valued at $50 million, at a fraction of the cost. Catania also hired a private company to produce a false study that suggested the land would need to be decontaminated, said Pagliarulo, which reduced the cost even further and, in the end, Catania’s company would purchase the property for only $5 million.

In return for his cooperation in the scheme, Pagliarulo alleged, Zampino got $300,000 cash in three instalments, money that came directly out of Pagliarulo’s bank account.

“I can’t remember the months (in 2006), but I know it was three times,” he said. “My bank records would show that.”

At the time, Pagliarulo was still involved in an illegal loansharking scheme with Catania and his father. When the younger Catania approached him for the cash, Pagliarulo alleged that he told him it was “for Frank Zampino.”

On top of the $300,000 kickback, the commission heard that Zampino got his kitchen remodelled courtesy of the Catanias, at a cost of $250,000. His family was also treated to a lavish New Year’s Eve party in December 2006, after which the entire Zampino clan allegedly spent the night in Paolo Catania’s multimillion-dollar Brossard mansion.

The fresh allegations against Mayor Gérald Tremblay’s former right-hand man came on the very day as a court date ahead of Zampino’s criminal trial. He is facing several charges, including fraud and breach of trust, in connection with the ill-fated Faubourg Contrecoeur project. Catania’s company, Construction Frank Catania & Associés Inc., is facing similar charges.

Zampino’s lawyer has denied the substance of the allegations. Zampino left city hall in 2008.

Pagliarulo’s testimony about Zampino on Monday was just the tip of the iceberg. The first 90 minutes of the morning session were dominated by his stunning and sometimes chilling revelations about his own relationship — both personal and professional — with the Catania family. Pagliarulo told the commissioners that he was intimidated, bullied and ultimately put in hospital by the powerful father-and-son duo — whom he described as people “you don’t mess around with.”

Pagliarulo said that he and Paolo Catania became close in the 1990s, eventually leading to an equally close relationship with the elder Catania.

“We were the dearest friends,” he said of the kinship between the two families. “We would share dinners, parties, holidays, Christmas, New Year’s, Father’s Day, Mother’s Day, our kids’ birthday parties.”

Pagliarulo described how the friendship eventually led to the birth of the illegal loansharking business in the late 1990s. At its peak, he said, the three men had lent out over $5 million to various people. A few left the country without paying back what they owed, however, and Pagliarulo said the Catanias blamed him.

“I was told that the loan had to get paid, or else. And I didn’t want to find out about the ‘or else,’ ” he testified, specifying that he found himself owing the Catanias about $1.5 million.

The threats, he said, began in mid-2008 and continued into 2009. At one point, Pagliarulo said, he was kidnapped, blindfolded, thrown into the back of a van and brutally beaten by two men who released him after three hours.

“They told me I had to pay the money and soon,” he said, adding that the injuries to his face were so severe that “you couldn’t really see who I was anymore.”

A broken nose, damaged eye socket, broken teeth and broken facial bones landed him in hospital for over a month. The same week he was allegedly beaten, Pagliarulo said, floral arrangements designed for a funeral were deposited on the front lawn of his ex-wife’s home. He knew what that meant, he told the commissioners.

“It meant ‘pay up or you’re dead.’ ”

Pagliarulo went to the police, and Paolo Catania was charged with extortion. All charges were eventually dropped in 2010, however, due to lack of evidence. Pagliarulo’s relationship with the Catania family would never be the same.

During the time they were still friends, however, Pagliarulo testified that he heard the younger Catania speak at length about the mob’s connections to the construction business in Montreal. Catania allegedly told Pagliarulo that his company, F. Catania & Associates, was winning precisely 22 per cent of public works contracts, with other companies in the cartel accepting lower “shares.”

Catania used cash, Pagliarulo said, to pay off lower-level city officials, who would approve tens of thousands of dollars in “extras” on work sites. Catania became so proficient with the “extras” scheme, Pagliarulo recalled, that he reportedly started referring to himself as “Mr. Extras.”

Catania’s net worth soared partly as a result of those schemes, Pagliarula alleged, eventually peaking at over $60 million. He had three homes, a collection of high-end cars, and a wine cellar filled with bottles valued at over $1.5 million. During one memorable birthday party for Catania’s wife, Pagliarulo said, songstress Gloria Gaynor was hired to provide the night’s entertainment.

The Rizzuto crime family, for their part, took five per cent off the top of every municipal contract, Pagliarulo alleged. That statement seemed to contradict the testimony of previous witnesses at the ongoing public inquiry, who put the amount going to the crime family at just 2.5 per cent, with an additional three per cent allegedly funnelled back to either the city’s executive committee or the Union Montreal party.